Nationwide: House prices up 1.2% in May

There are further signs of recovery today in the housing market after the Nationwide has reported a rise in prices of 1.2% in May, compared with April.

This takes the average price of a home to £154,016.

The Nationwide said house prices fell by 0.4% in April but followed a rise of 0.9% in March, making the latest rise the second in three months, and takes the annual rate of decline to 11.3%, slowing from the 15% reported in April.

However, the Nationwide cautions that it is still too early to say there was a definite turn in the market. Rising unemployment and the ongoing tightening of lending criteria means house prices are likely to resume their downward spiral, according to the Nationwide.

Nationwide’s Chief Economist Martin Gahbauer, said: “During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods.”

“In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet“, added Mr Gahbauer.

Furthermore, the fact remains that without a significant deposit, potential buyers are still unable to secure a mortgage.

It also must be pointed out that even after the recession had ended in the 1990s, house prices continued their downward path for several years, said the Nationwide.

In other news this week, the British Bankers’ Association said the number of mortgages approved for house purchases rose by 4% in April compared with the previous month, rising from 26,671 to 27,685 approvals.

However, compared with April 2008, this represented a fall of 15.5%.

Finally, Jones Lang LaSalle said house prices in the UK could fall a further 12-14% during the remainder of the year and a further 1-3% next year, due to higher unemployment and the implications this has for repossessions and household finances.

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